International Developments

A Company Constitution: An Important Document in Cambodian Corporate Field

A country has a constitution; likewise, in a commercial world, the company also has its constitution. A country’s constitution, in simple understanding, represents the supreme law which prevails over other contradictory laws and regulations. In an equivalent sense, the company’s constitution is the codified document governing on the management of a company; in similar way to a country’s constitution. Under Cambodian Law on Commercial Enterprise (LCE), the company’s constitution is known as Memorandum and Articles of Association, or Memorandum and Articles of Incorporation (MAA).[1]

This article elaborates on the structure of the MAA and how it is essential to the Company.

As required by the applicable laws and regulations in Cambodia, the MAA is among other documents to be submitted to the relevant authorities for the purpose of incorporation. The MAA is outlined based on the LCE in brief as below[2]:

  • the name of the company, registered office, the objectives of the company;
  • the authorized capital, classes of shares, par value per share;
  • the rights, privileges, restrictions and conditions attached to each class (if there is more than a class of shares);
  • restriction on issuance, transfer or ownership of share, a statement shall be written to reflect on such restriction;
  • the name and complete address of each shareholder;
  • the number of directors, or the maximum and minimum number of directors of the company.

There is no limitation on what need to be in the MAA. It can be included any necessary provision that is deemed as important for the company to operate.[3] It can be how the company reserves the fund for the internal operation, specify the obligation of the directors and shareholders, the procedure of meeting as an example. The MAA of the company has no big differences from the constitution of one’s country. Without the specific provision stated in the MAA, it leaves more room for interpretation or leaves deadlock situation due to obscurity. On an important note, the company can amend its MAA without any restriction on how many times, but it requires to go with the legal process, particularly with the Ministry of Commerce of Cambodia (MOC). The only MAA recognized by law is the one affixed with the MOC stamp. As a consequence, during the legal due diligence, the lawyer only reviews on the MAA that is affixed with the MOC stamp; otherwise, the MAA has no legal effect.

Since the MAA is essential to the company, shareholders or incorporator is very careful on how they draft or envisage the provisions they want to see. Before the shareholder­—the owner of the company decides on what to include in the MAA, they need to decide on the form of company which they want to incorporate (i.e., private limited company, or public limited company), name, registered capital, address of the company, and the rights and obligations. In Cambodian commercial atmosphere, the MAA is crucial to the company because the MAA reflects the identity of company and the legal existence of the company as the separate legal personality. Since all directors and shareholders sign on the MAA, each of them shall respect to such document. In case the resolution is issued, and it is contrary to any provision in the MAA or by law, then such resolution cannot be used or enforceable. It applies the same to the adoption of new law of one’s country. If it is contrary to the constitution, then it is automatically repealed. Furthermore, the MAA is a source of power because the MAA normally states on the duty of shareholder and director. Both shareholder and director shall act according to the MAA and in any violation of power, such person shall be liable for their own acts.

In conclusion, a Cambodian company constitution is like another version of the country’s constitution. It is just difference on the nature, context and scale. It is interesting that the existence and history of country’s constitution may influence on the creation of company constitution.

[1] Note that some countries use different term of the company’s constitution to Article of Association (AOA), Article of Incorporation (AOI) or addition of word “memorandum” to AOA and AOI. In some context, there is a slight distinction between the memorandum and articles of association, and memorandum and articles of incorporation which in general practice, especially in Cambodia we view it the same. Further on the word “company’s constitution”, in some countries, such word can also refer to the MAA and other necessary documents to the company such as the resolutions, meeting minutes, share certificate, etc.

[2] Article 94 of Law on Commercial Enterprises, promulgated by Royal Kram NS/RKM/0605/019, dated 19 June 2005.

[3] Article 94 of Law on Commercial Enterprises, promulgated by Royal Kram NS/RKM/0605/019, dated 19 June 2005.

A Graduate Law Student at the Royal University of Law and Economics (Cambodia) and an exchange student at Universitas Airlangga (Indonesia) and West Virginia University (America).


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